Buyers resist outsourcing trend

24 July 2008
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25 July 2008 | Jake Kanter

Tightening economic conditions do not make outsourcing more attractive for the majority of buyers, according to the results of the latest SM100 poll.

It found 54 per cent of purchasers do not think the economic downturn should make buyers take greater consideration of outsourcing. They argued the financial climate should not dictate such strategies.

"I would not say economic conditions are making outsourcing any more or less attractive. As always, any consideration of that decision must stand alone in terms of cost and benefits," said Shaun Evans, supplier relationship manager at Britannia Building Society.

Other buyers felt outsourcing doesn't always deliver best value and having to manage third party services could even be more costly.

Tony Morris, principal business consultant at financial services company CODA, said: "Outsourcing has its place, but most of the time it does not turn out to be cheaper or increase quality."

Andy Foulis, head of procurement and FM services at community and business developer Highlands and Islands Enterprise, said outsourcing can be of value but it is important to consider the life cost of a contract.

It follows reports of a recent resurgence in outsourcing, as organisations look to reduce costs. The latest data from consultancy TPI found outsourcing contracts worth ?25.5 billion (£19.7 billion) have been signed so far in EMEA (Europe, the Middle East and Africa) during 2008, a 58 per cent increase on the same period last year.

But fears of a downturn have not undermined the attraction of outsourcing.

Consultant Edward Savage said that outsourcing is always attractive and can help companies secure specialised skills, reduce costs and increase flexibility.

Another buyer told SM some marketing companies are looking to reduce headcounts during the downturn and these services are being replaced by outsourcing.



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